tomkaz

Bitcoin, 21st Century Tulips ?

41 posts in this topic

Long post summary: be careful about getting caught up in the current bitcoin and cryptocurrency madness. This looks like the tulip mania that’s struck Holland in the 1630s. 

 

Last I saw, BTC is above $11,300, up about 13% on the day. While I believe the block chain technology will have some very valuable applications, and even that cryptocurrencies will find their place in the world, this is ridiculous. 

 

Three of four sons were down for turkey, the two eldest own coin, both BTC and ETH. Turns out they’ve owned some coin since the last break below $1,000.

 

Anyway, the college junior is trading cryptocurrency pairs using some relatively sophisticated algos and price monitoring analytics. While it is common in my work, I never imagined that I would be discussing Bollinger Bands and Relative Strength Indices with this son at this age over appetizers. Actually quite fascinating given he claims he’s generating 2-4% per day on the days he chooses to trade and he "almost never" loses money (he is not constantly invested other than owning the coins). The reason is he trades pairs and is long one while being short the other, thus capturing relative price change  but being relatively ispnsultated from a spike or a swoon. At least in theory. 

 

This is not big money and it is why he can trade without impacting the market. My wife gave him a couple thousand to trade alongside his money and I think our cost is at 6,000 $/BTC. So great trade just as a long, assuming we don’t roundtrip it. 

 

Here’s the interesting thing and the reason I am posting, he thinks there’s is a massive "pump and dump" going on right now on a global scale. His analysis follows not just price but volume as well, giving him the ability to identify P&D efforts as they are developing. Admits he sometimes jumps in and out in the pump phase. 

 

Both sons predicted a big run upward this week after the Thanksgiving holiday. We were discussing selling some of ours and they’d said to wait until mid or late week this week at a minimum. Their view, holiday discussions about bitcoin would create demand from non-owners or casual owners. It takes a couple days to figure out how to buy and from where so they theorized there would be a strong bid into this week. The trader son also felt the pumpers would come in to get the greed juices flowing further. 

 

So far my knuckleheads have been accurate. But here’s the thing, trader son says this current spike in price is not only on low volume but the thinks the "volume" is actually phantom, not real. I got that via text message so don’t know why he feels that’s way. 

 

Anyway, if you are thinking about doing something in the cryptos, be cautious. Ethereum is less subject to manipulation and less well known than bitcoin but still subject to P&D efforts. Then again, this is all Greek to me. 

 

"Be careful out there" seems good advice. 

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Sorry, for anyone not familiar with the tulip reference, here’s the price chart from the mania of the 1630s. 

 

280px-Tulip_price_index1.svg.png

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This is a classic chart. Where do you think we are with bitcoin at this point? 

 

30B3075D-9E56-4427-B745-737DF25A9191.jpeg.0f2b5a090500b5b2d6b16b2c48f79762.jpeg

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Be careful. It could also be confiscated as it is used to support sterile transactions of terrorists, organized crime (spyware/malware), and foreign interference peddling. Too easy for fraudulent transaction/criminal activity to take place.

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Despair.  Always despair.  Once the Chinese find better technology to funnel money out of their country it becomes MySpace. It's a social experiment, not durable currency.  Though very interesting, the crash will be spectacular...

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43 mins ago, tomkaz said:

Long post summary: be careful about getting caught up in the current bitcoin and cryptocurrency madness. This looks like the tulip mania that’s struck Holland in the 1630s. 

 

Last I saw, BTC is above $11,300, up about 13% on the day. While I believe the block chain technology will have some very valuable applications, and even that cryptocurrencies will find their place in the world, this is ridiculous. 

 

Three of four sons were down for turkey, the two eldest own coin, both BTC and ETH. Turns out they’ve owned some coin since the last break below $1,000.

 

Anyway, the college junior is trading cryptocurrency pairs using some relatively sophisticated algos and price monitoring analytics. While it is common in my work, I never imagined that I would be discussing Bollinger Bands and Relative Strength Indices with this son at this age over appetizers. Actually quite fascinating given he claims he’s generating 2-4% per day on the days he chooses to trade and he "almost never" loses money (he is not constantly invested other than owning the coins). The reason is he trades pairs and is long one while being short the other, thus capturing relative price change  but being relatively ispnsultated from a spike or a swoon. At least in theory. 

 

This is not big money and it is why he can trade without impacting the market. My wife gave him a couple thousand to trade alongside his money and I think our cost is at 6,000 $/BTC. So great trade just as a long, assuming we don’t roundtrip it. 

 

Here’s the interesting thing and the reason I am posting, he thinks there’s is a massive "pump and dump" going on right now on a global scale. His analysis follows not just price but volume as well, giving him the ability to identify P&D efforts as they are developing. Admits he sometimes jumps in and out in the pump phase. 

 

Both sons predicted a big run upward this week after the Thanksgiving holiday. We were discussing selling some of ours and they’d said to wait until mid or late week this week at a minimum. Their view, holiday discussions about bitcoin would create demand from non-owners or casual owners. It takes a couple days to figure out how to buy and from where so they theorized there would be a strong bid into this week. The trader son also felt the pumpers would come in to get the greed juices flowing further. 

 

So far my knuckleheads have been accurate. But here’s the thing, trader son says this current spike in price is not only on low volume but the thinks the "volume" is actually phantom, not real. I got that via text message so don’t know why he feels that’s way. 

 

Anyway, if you are thinking about doing something in the cryptos, be cautious. Ethereum is less subject to manipulation and less well known than bitcoin but still subject to P&D efforts. Then again, this is all Greek to me. 

 

"Be careful out there" seems good advice. 

 

I was a relative value/Vol trader in commodity options for years (similar to what your sons are doing spreading the coins vs each other), the best markets for such endeavors are highly volatile markets.  As soon as CME lists a futures contract and it shows that it has some liquidity I'm gonna do my best to see if I can make markets in options.  These products have the kind of volatility that option traders dream of.

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Posted (edited)

48 mins ago, tomkaz said:

This is a classic chart. Where do you think we are with bitcoin at this point? 

 

30B3075D-9E56-4427-B745-737DF25A9191.jpeg.0f2b5a090500b5b2d6b16b2c48f79762.jpeg

Just beyond the bear trap.

 

Launch in 5...4...3...2...

Edited by Gotcow?

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1 hour ago, tomkaz said:

Sorry, for anyone not familiar with the tulip reference, here’s the price chart from the mania of the 1630s. 

 

280px-Tulip_price_index1.svg.png

I thought it was a great reference.

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The folks who invested in Mt. Gox when this all started and their bitcoin investment "disappeared" still have not recouped anything. 

So .....

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I put a grand in a few years ago when it was around $250, took it out at $400 fearing the impending crash. Wish I would have waited a little longer lol

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2 hours ago, capequahog said:

Can you by pizza with them, where does SIM stand, can you pay for healthcare with them

Heard an interview last week where a guy mentioned one of the earliest known retail transactions in bitcoin. A guy bought a pizza with it and, based on prices then, those coin would be worth $28mm today. No lie. 

 

You can buy plenty with them...

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Don't forget Litecoin, up 2000% YTD.  Interesting concept, but once a transaction closes, its irreversible.  So if your crypto is hacked there is no recourse.  The supporting block chain could be falable, though they say the miners authentication is solid.  Still very confusing to me.

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So here’s an interesting observation. The CEO of Overstock.com is a fan of crypto currencies (and Glenn Beck). In 2014 article linked below, he acknowledge owning several million dollars worth of bitcoin. Overstock was one of the first retailers to take bitcoin as payment for products from consumers. 

 

https://www.coindesk.com/overstock-ceo-holds-millions-bitcoin/

 

 

This interview was from Fox Business from the past week. Byrne does a good job of discussing but something struck me about he choice of words later in the interview and the implications. Byrne is one of those who believes that fiat currency will collapse at some point, which means all of the fractional reserve currencies, including the USD. The Fox team do a decent job of presssing him on this but did not ask the question which needed to be asked: how are cryptocurrencies not also fiat currencies or worse due to their lack of any asset or sovereign backing whatsoever? They hint around it but did not press him on that, though Degan does point out the USA has trillions in government owned assets which could be sold if we ever got to that point. 

 

But here the point never discussed: crypto currencies are TOTALLY dependent on a functioning communications system to remain valid. Take away the internet infrastructure, take away a reliable internet connection for individuals, take away electric power, and cryptocurrencies become useless. These are not **** hit the fan currencies, these are not valuable if polite society breaks down and these won’t work if there is physical destruction to the servers involved in the transaction process. 

 

Anyway, the interview is still worth watching if this is something of interest to you.  

 

 

 

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